Financing a New Roof or Your Insurance Deductible: Your Options

Two different problems

Paying for a full replacement and paying an insurance deductible are different-sized problems. A replacement is usually a project loan in the tens of thousands. A deductible can be $1,000–$2,500, or a percentage of your dwelling coverage — on a $400,000 home, a 2% hurricane deductible is $8,000.

Paying for a full replacement

Most homeowners compare an unsecured personal loan with home-equity borrowing. Personal loans decide quickly and don't put your home up as collateral. A HELOC or home-equity loan usually costs less but takes longer to set up.

• Unsecured home-improvement loan (for example LightStream): fast, no collateral, best with strong credit.
• Loan marketplace (for example Hearth): lets you compare offers across a wider credit range.
• HELOC or home-equity loan: lowest rates in many cases, but slower and secured by your home.
• Cash-out refinance: one payment, but often a poor trade if your current mortgage rate is low.

Paying a deductible you can't cover in cash

Many project lenders have minimum loan amounts around $5,000, which is more than many deductibles. For smaller amounts, homeowners usually look at:

• A credit union personal loan — federal credit unions cap most loan rates, and some lend amounts under $1,000.
• An online personal lender that makes smaller loans, such as Upgrade.
• A 0% intro-APR credit card — only if you can pay it off before the promotional period ends.
• A HELOC you already have open.

The deductible is always the homeowner's

Under Florida law the homeowner is responsible for paying the deductible. A contractor cannot waive it, rebate it, or offer free work to offset it. If anyone offers to "cover" your deductible, treat it as a warning sign.

Questions to ask any lender

• What is the minimum and maximum loan amount?
• Is there an origination fee or prepayment penalty?
• Is the rate fixed, and what is the total cost over the full term?
• How fast are funds available?